Secretary of health and human services nominee apologizes for failing to pay income taxes on use of a luxury car and driver
03 02 09 - 12:20
Daschle Apologizes Over Taxes as Allies Give Support
By CARL HULSE and ROBERT PEAR - The New York Times
WASHINGTON — Tom Daschle offered a public apology on Monday evening for his failure to pay income taxes on use of a luxury car and driver, and Senate Democrats rallied behind him, saying they intended to win his confirmation as secretary of health and human services.
Following a closed-door meeting with the Senate Finance Committee, Mr. Daschle, the former majority leader of the Senate, said his failure to pay more than $128,000 in taxes was “completely inadvertent.”
“But that’s no excuse,” said Mr. Daschle, who looked somewhat sheepish as he was surrounded by Democratic senators he led until being defeated in 2004. “I deeply apologize to President Obama, to my colleagues and to the American people.”
At the same time, it became clear on Monday that Mr. Daschle was responsible for thousands of dollars in additional unpaid taxes related to his use of the car service, even after already paying $140,000 in taxes and interest. He has acknowledged that he owes Medicare taxes equal to 2.9 percent of the personal value of the car service he received from Leo Hindery Jr., a big Democratic donor and founder of a private equity firm to which Mr. Daschle was an adviser.
Mr. Daschle’s failure to pay Medicare taxes on the income was discovered by the Finance Committee. The amount of the unpaid Medicare tax has not been disclosed. But in his amended returns, filed on Jan. 2, Mr. Daschle estimated that the value of the car service was equivalent to income totaling $255,256 in the years from 2005 to 2007.
Despite the tax issue, the chairman of the Finance Committee, Senator Max Baucus, Democrat of Montana, scheduled a formal confirmation hearing for next Tuesday and said he would support the nomination.
Other Democrats on the panel said that the tax error, while embarrassing, was understandable because Mr. Daschle had not been provided a 1099 Internal Revenue Service form showing the car as income.
“I will support the nomination of Tom Daschle in the committee and on the floor with a great deal of vigor,” said Senator John D. Rockefeller IV, Democrat of West Virginia.
But Republicans said they remained troubled by the nomination. Senator John Ensign, a Nevada Republican who sits on the panel, said he believed that the Daschle tax problems merited much more scrutiny and that the tax mistakes admitted by an earlier Obama administration nominee, Treasury Secretary Timothy F. Geithner, “seem more plausible.”
Senator Pat Roberts, Republican of Kansas, a member of the Finance Committee, refused to say what he thought of Mr. Daschle’s explanation for his unpaid taxes. Public sentiment in Kansas is “not especially good” for Mr. Daschle, the senator said.
Republican aides said Senator Charles E. Grassley of Iowa, the senior Republican on the committee, continued to have questions that went beyond the taxes. In particular, they said Mr. Grassley was concerned about potential conflicts of interest, given the large amount of income Mr. Daschle received for speaking to health care companies and advising them.
Mr. Daschle, who appeared before the panel for about 15 minutes and answered questions, himself acknowledged the political sensitivity of seating someone in the cabinet who had not paid his full share of taxes when ordinary Americans could find themselves in significant trouble for not doing so.
“The American people have high expectations for those of us who serve the public good,” he told reporters. “That’s especially true when it comes to taxes. They pay their fair share and they expect all of us to do the same, and that’s as it should be.”
Senator Kent Conrad, a North Dakota Democrat and a close friend of Mr. Daschle, said that he could not speak for Republicans, but that he felt sure Mr. Daschle had “convinced any fair-minded person” he was blameless.
“I don’t know anyone more honorable, more decent, more honest and more qualified for this position,” said Mr. Conrad, a former state tax commissioner in North Dakota. “The only reason we know about these tax issues is that Senator Daschle came forward.”
Mr. Baucus said that Mr. Daschle would be “a great partner” in the effort to overhaul the nation’s health care system, which is Mr. Baucus’s top priority for the year.
Earlier in the day, President Obama also voiced public support for the nomination.
The Finance Committee has also been scrutinizing the tax deductions that Mr. Daschle and his wife, Linda, claimed for charitable contributions. A summary of Mr. Daschle’s tax issues provided by the Obama administration says that he and his wife “made $276,341 in charitable contributions” from 2005 to 2007.
Members of the Obama transition team discovered a potential problem when they noticed that Mr. Daschle had taken a tax deduction for money given to a wounded Iraqi war veteran. “The money had gone directly to the individual instead of to a 501(c)(3)” organization, the summary says.
Bruce R. Hopkins, a tax lawyer in Kansas City, Mo., who has written several books on tax law for nonprofit organizations, said: “There is no charitable deduction for a contribution to an individual, no matter how deserving. For a deduction to be available, the contribution has to go to a qualified charity.”
Mr. Obama has named Mr. Daschle to be director of a new White House Office of Health Reform. For that job, he does not need Senate confirmation. Administration officials said they had no reason to seek or consider anyone else for the job of health secretary.
“No, not at all,” said a White House official. “There is no search going on. Tom Daschle is the nominee.”
Congressional officials acknowledge privately that if Mr. Daschle were not a former member of the Senate, his nomination could well be in serious jeopardy, especially coming after disclosures that Mr. Geithner also owed back taxes.
But given the loyalty he has among senators who have known and worked with him for decades in some cases, they expect him to be confirmed in the absence of new developments.
In another boost to Mr. Daschle, Senator Edward M. Kennedy, the ailing Massachusetts Democrat who is highly influential on health care policy, was making phone calls on Mr. Daschle’s behalf, officials said.
Aides to the president remained confident that Mr. Daschle would be confirmed. They said Mr. Obama had not been calling senators to lobby on Mr. Daschle’s behalf; the sense inside the White House is that the president does not need to do so.
Sheryl Gay Stolberg contributed reporting.